Obesity remains a serious health problem and it is no secret that many people want to lose weight. Behavioral economists typically argue that “nudges” help individuals with various decisionmaking flaws to live longer, healthier, and better lives. In an article in the new issue of Regulation, Michael L. Marlow discusses how nudging by government differs from nudging by markets, and explains why market nudging is the more promising avenue for helping citizens to lose weight.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Commentary

Tax Credits Keep the “Choice” in School Choice

By
H. Lillian Omand

November 11, 2003

Last summer the Supreme Court gave the school choice movement an enormous boost by broadly affirming the constitutionality of voucher programs, and this year school choice is gaining surprising political support from the likes of D.C. Mayor Anthony Williams and California Senator Dianne Feinstein. But “school choice” is not an incantation that magically transforms education. Choice is needed for two reasons: competition and freedom. Competition leads to higher quality schools, and freedom for parents to decide how their children are educated is a fundamental, constitutional right. Unfortunately, some school choice programs do a poor job of increasing competition and freedom through choice.

Some school choice programs, for instance, do not stimulate much competition among schools. This happens, in many cases, because of a low voucher amount, which makes it difficult for non-Catholic private schools to compete for students. On average, Catholic elementary school tuition covers only 60 percent of the per pupil cost; most of the rest comes from the parish and diocese. Other private schools-lacking a parish or diocesan backer-have to charge tuition rates much higher than the voucher amount no matter how much they stick to essentials and economize.

In Cleveland, for example, where the voucher is a mere $2,500 per child, private school enrollment in the city has not increased since the voucher program started. A choice between public school and Catholic school is better than no choice at all, but it does not get us very far towards more competition and freedom.

In a recent nationwide survey of over 1,000 private school directors, more than 90 percent of Christian schools (including Catholic schools) said they would not support or participate in a school choice program that would require the school to exempt some students from religious activities. Also, more than 80 percent of all private schools-religious, non-religious, elite, and low-tuition alike-said they would not participate in a school choice program that would not allow them to deny admission to students with behavioral problems. What good are vouchers if hardly any private schools will accept them?

On the other hand, the Milwaukee voucher program imposes these regulations on participating schools and most Milwaukee private schools participate. How did that happen? The religious schools in Milwaukee received privately funded, non-regulated voucher funds-not public funds-while their participation in the public voucher program was held up for three years in the court system. The private donors pulled out after the Wisconsin Supreme Court approved the participation of religious schools. But by then about half of the students in Milwaukee religious schools depended on someone else paying their tuition. The schools then had to choose between accepting the vouchers with the regulations or going out of business.

Regulating private schools that utilize vouchers undermines both competition and freedom. It is also unnecessary. As long as the voucher or tax credit amount is large enough to cover the realistic cost of educating children, schools will develop to meet the variety of demands that parents place upon them. Schools will have to please parents, not regulators, to stay in business.

This is why tax credits are a better method for delivering school choice than vouchers. All the existing voucher programs are heavily regulated, but all the existing tax credit programs are minimally regulated. Tax credits are more consistent with competition and freedom because they give taxpayers a choice. With voucher programs, all taxpayers have to contribute to the program, whether they support it or not. With tax credits, people can choose whether to put some of their money into private school tuition, or keep it going to public schools through regular taxes. This is a much better way to make schools accountable to the public as a whole than regulations pushed through legislatures by interest groups.

Individuals and corporations claiming tax credits for donations to scholarship programs have already helped tens of thousands of low-income children attend private schools in Florida, Arizona and Pennsylvania. But to truly extend the benefits of competition and freedom to American families, higher income parents need the ability to take a credit against tuition paid for their own children. Parents who compare private schools against the background of higher quality public schools will push private schools to higher standards than parents comparing these same schools against dismal public alternatives. Such a dual tax credit system, or “universal tax credits,” has been proposed but has not received nearly enough attention from school choice advocates.

Broadening support for school choice is good news for this nation’s children, but unless we stay focused on truly advancing competition and freedom, school choice will end up being little more than an empty promise.